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XYZ Corporation, a Canadian company, imports wine from California. XYZ Corporation has a payment obligation of USD 5,000,000
that needs to be settled in 180 days. * St,0=1.35 CAD/USD.
The XYZ forecasts the future spot rate in 180 days as follows:
Possible Outcomes Probability
A. 1.15 CAD/USD 20%
B. 1.30 CAD/ USD 20%
C. 1.40 CAD/USD 20%
D. 1.55 CAD/USD 40%
Calculate the expected amount to be paid if XYZ Corporation decides not to hedge against the spot rate movement.



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